In order to avoid the possibility of a claim for unfair dismissal, the dismissal of an employee must be for a reason allowed by law and must be done following the correct procedure. In addition, the correct notice period must be given to the employee, to avoid the possibility of a claim for wrongful dismissal. Damages in both these cases can be substantial, and the costs of defending such a claim, both in terms of time and money, can be significant.
Firstly, there must be a fair reason for the dismissal. What constitutes a fair reason is prescribed by law and any other reason would be unfair. The reason can only be fair if:
(a) It relates to the employee's conduct.
(b) It relates to the employee's capability or qualifications
(c) It is due to redundancy
(d) It is because the employee has reached the normal retirement age
(e) Continuing to employ the employee would be illegal
(f) It is for "some other substantial reason". This is a fair reason that doesn't fall
under the other catergories but which would justify the dismissal of an employee
holding the position they held. The most common examples relate to the business
needs of the employer.
The employer must also be able to show that it acted reasonably in dismissing the employee for that reason.
Secondly, an appropriate fair procedure must be followed fully before deciding whether to dismiss an employee. In the cases of misconduct or poor performance, the Acas Code of Practice on Disciplinary and Grievance Procedures should be complied with. If this isn't followed, even if the reason is fair and the employer acted reasonably in dismissing for that reason, the tribunal may nonetheless find that the dismissal was unfair and increase compensation by up to 25% if the failure to follow the Code was unreasonable.
For dismissals on the grounds of retirement, employers are required to follow a particular procedure, which includes giving the employee at least 6 months written notice of the proposed retirement date, and considering any request by the employee not to retire.
For other types of dismissal, including redundancy, there is still a requirement to follow a fair procedure.
Giving the correct notice
Unless there has been proven gross misconduct, employees must be given a period of notice if their employment is terminated. The notice period must not be shorter than the statutory minimum notice period, but it may be longer, if provided for in their Contract of Employment. It may be possible depending on the employee's Contract of Employment, for them to be paid in lieu of notice. If the correct notice is not given, the employee is likely to have a claim for wrongful dismissal. If successful, any damages awarded would include compensation for loss of earnings and benefits which they would have received during the notice period to which they were entitled.
Trying to resolve any issues as soon as they arise with employees can be a good way of reducing the risk of getting into a situation where wrongful or unfair dismissal is a possibility. However, make it clear that any meeting or discussion is informal, and then explain that if issues aren't resolved, then a formal process will be commenced. The following practical steps can also be useful:
- Undertake regular appraisals with employees and be as honest as possible so there are no surprises later
- Keep an up-to-date personnel file of each employee, to include in particular any paperwork or correspondence relating to meetings or discussions about an employee's performance
- If the Contract of Employment allows, use probationary periods to get to know the employee and whether they are a good fit with the organisation. Extend probationary periods if necessary, (although you will need to check that the wording of the clause dealing with probationary periods allows you to do this)
- Carry out a full investigation of any allegations made by or against an employee and make sure you hear their side of the story.